Financial Planning as a Single Parent

How to Do Financial Planning as a Single Parent

Financial Planning as a Single Parent

As a single parent, it is hard to manage your finances. You are in charge of your money, and you have nobody to help in making a budget or creating an effective financial plan.

As a single parent, you have a lot of responsibility resting on your shoulders; you have a lot of debts to pay off, you need to meet household expenses, you have to arrange for day-care expenses and other related expenses of your child. This is why it seems a bit complicated to do financial planning.

It can take a long time to achieve your goal, but you can do it if you continue to be consistent with your effort. Here is how you can do it.

Emphasise monthly budget

Whether you are a single mother or a single dad, your main income source may not be enough to meet all your expenses, including in the form of child support. Therefore, you may need to have a side gig.

However, it is to note that extra income will not always be enough to cover all those expenses. You will have to track all your expenses to ensure that you are making ends meet smoothly. You may not be habitual of tracking numbers because your partner had been doing so, but now you will have to do it.

Even though it seems scary, you have to do it. However, despite tracking all expenses, you might be on a tight budget because of unexpected expenses, but you can take out instant loans in Ireland. To set a budget, you need to know how much money you need every month to make ends meet.

Write down expenses in a list and evaluate how much you will be able to cut them down. You do not need to be on a lean budget, but you should be careful about your spending.

Track spending

Your budget will not serve you the purpose if you do not track your expenses. To stay on top of your finances, you should know how much and where your money is going. Make sure that you have a record of all transactions you make with your credit card.

You often ignore those expenses that you make with your credit card. If it seems difficult to do at the end of the month, you should do it weekly or bi-weekly. A rule of thumb says that it is a good idea to do it weekly because you can prevent yourself from overspending. If you overspend anyhow, make sure that you adjust it in the next month.

Manage debts

One of the significant challenges that single parents face is debt obligations. If you have some overdue debts, it will certainly make it complicated for you to stay on top of your finances until you pay all of them off.

When money is tight, it can be complicated to keep up with repayments. If you have multiple debts, you should make a repayment plan to settle all your dues. Otherwise, your budget will not fulfil your purpose.

First off evaluate your budget and find out how much you are left with after paying all of your expenses because that money you will use to pay off your debt. If you find that you are left with insufficient funds, you should talk to your lenders immediately.

Tell them of your financial situation and ask if they can allow you to make minimum repayments. If lenders do not agree upon a new repayment plan, you can also consolidate your debts. Consolidation loans will help you make payments of all outstanding loans outright so you will have only one large loan with lower monthly repayments.

Note that it can be quite difficult to qualify for these loans when you have a poor credit rating. The other option is to seek help from the debt management company. However, if nothing works, you are left with only one option, and that is choosing either a snowball method or an avalanche method. However, try to pay off higher debts first like credit card bills and bad credit loans. This will help you save money in interest.

Do not ignore emergency cushion

No matter how large debt you have to pay off, no matter how much you earn, you should not forget the importance of building an emergency cushion. A rule of thumb says that you should set aside at least 10% of your gross income. This money will help you fund unforeseen expenses.

However, if you do not earn much or debt is putting pressure on your finances, you can bring it down but should not stop it. If you do not have emergency corpus and you come up with an unforeseen expense, you will have to take out a new loan. It might be quite difficult to qualify for a new loan when you have already multiple debts. This is why you should not stop stashing away money for your emergency.

You can easily do financial planning as a single parent. Try to settle all of your debts on time, create a budget, track your spending and do not stop setting aside for emergency reasons.

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